II 

115TH CONGRESS 

1ST SESSION S. 1500 

To amend the Federal Deposit Insurance Act to ensure that the reciprocal 

deposits of an insured depository institution are not considered to be 

funds obtained by or through a deposit broker, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 29, 2017 

Mr. WARNER (for himself, Mr. MORAN, Ms. HEITKAMP, Mr. PERDUE, Mr. 

MENENDEZ, Mr. BOOZMAN, and Mr. VAN HOLLEN) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To amend the Federal Deposit Insurance Act to ensure that 

the reciprocal deposits of an insured depository institution are not considered to be funds obtained by or 

through a deposit broker, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Keeping Capital Local 

5 for Underserved Communities Act of 2017’’. 


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•S 1500 IS

1 SEC. 2. LIMITED EXCEPTION FOR RECIPROCAL DEPOSITS. 

2 (a) IN GENERAL.—Section 29 of the Federal Deposit 

3 Insurance Act (12 U.S.C. 1831f) is amended by adding 

4 at the end the following: 

5 ‘‘(i) LIMITED EXCEPTION FOR RECIPROCAL DEPOS6 ITS.— 

7 ‘‘(1) IN GENERAL.—Reciprocal deposits of an 

8 agent institution shall not be considered to be funds 

9 obtained, directly or indirectly, by or through a de10 posit broker to the extent that the total amount of 

11 such reciprocal deposits does not exceed the lesser 

12 of— 

13 ‘‘(A) $10,000,000,000; or 

14 ‘‘(B) an amount equal to 20 percent of the 

15 total liabilities of the agent institution. 

16 ‘‘(2) DEFINITIONS.—In this subsection: 

17 ‘‘(A) AGENT INSTITUTION.—The term 

18 ‘agent institution’ means an insured depository 

19 institution that places a covered deposit 

20 through a deposit placement network at other 

21 insured depository institutions in amounts that 

22 are less than or equal to the standard max23 imum deposit insurance amount, specifying the 

24 interest rate to be paid for such amounts, if the 

25 agent institution— 


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1 ‘‘(i)(I) when most recently examined 

2 under section 10(d) was found to have a 

3 composite condition of outstanding or 

4 good; and 

5 ‘‘(II) is well capitalized (as defined in 

6 section 38(b)(1)); 

7 ‘‘(ii) has obtained a waiver pursuant 

8 to subsection (c) of this section; or 

9 ‘‘(iii) does not receive an amount of 

10 reciprocal deposits that causes the total 

11 amount of reciprocal deposits held by the 

12 agent institution to be greater than the av13 erage of the total amount of reciprocal de14 posits held by the agent institution on the 

15 last day of each of the 4 calendar quarters 

16 preceding the calendar quarter in which 

17 the agent institution was found not to have 

18 a composite condition of outstanding or 

19 good or was determined to be not well cap20 italized. 

21 ‘‘(B) COVERED DEPOSIT.—The term ‘cov22 ered deposit’ means a deposit that— 

23 ‘‘(i) is submitted for placement 

24 through a deposit placement network by an 

25 agent institution; and 


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1 ‘‘(ii) does not consist of funds that 

2 were obtained for the agent institution, di3 rectly or indirectly, by or through a deposit 

4 broker before submission for placement 

5 through a deposit placement network. 

6 ‘‘(C) DEPOSIT PLACEMENT NETWORK.— 

7 The term ‘deposit placement network’ means a 

8 network in which an insured depository institu9 tion participates, together with other insured 

10 depository institutions, for the processing and 

11 receipt of reciprocal deposits. 

12 ‘‘(D) NETWORK MEMBER BANK.—The 

13 term ‘network member bank’ means an insured 

14 depository institution that is a member of a de15 posit placement network. 

16 ‘‘(E) RECIPROCAL DEPOSITS.—The term 

17 ‘reciprocal deposits’ means deposits received by 

18 an agent institution through a deposit place19 ment network with the same maturity (if any) 

20 and in the same aggregate amount as covered 

21 deposits placed by the agent institution in other 

22 network member banks.’’. 

23 (b) INTEREST RATE RESTRICTION.—Section 29 of 

24 the Federal Deposit Insurance Act (12 U.S.C. 1831f) is 


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1 amended by striking subsection (e) and inserting the fol2 lowing: 

3 ‘‘(e) RESTRICTION ON INTEREST RATE PAID.— 

4 ‘‘(1) DEFINITION.—In this subsection, the term 

5 ‘covered insured depository institution’ means an in6 sured depository institution that— 

7 ‘‘(A) under subsection (c) or (d), accepts 

8 funds obtained, directly or indirectly, by or 

9 through a deposit broker; or 

10 ‘‘(B) while acting as an agent institution 

11 under subsection (i), accepts reciprocal deposits 

12 (as defined in such subsection) while not well 

13 capitalized (as defined in section 38(b)(1)). 

14 ‘‘(2) PROHIBITION.—A covered insured deposi15 tory institution may not pay a rate of interest on 

16 funds or reciprocal deposits described in paragraph 

17 (1) that, at the time that the funds or reciprocal de18 posits are accepted, significantly exceeds the limit 

19 set forth in paragraph (3). 

20 ‘‘(3) LIMIT ON INTEREST RATES.—The limit on 

21 the rate of interest referred to in paragraph (2) shall 

22 be— 

23 ‘‘(A) the rate paid on deposits of similar 

24 maturity in the normal market area of the cov25 ered insured depository institution for deposits 


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1 accepted in the normal market area of the cov2 ered insured depository institution; or 

3 ‘‘(B) the national rate paid on deposits of 

4 comparable maturity, as established by the Cor5 poration, for deposits accepted outside the nor6 mal market area of the covered insured deposi7 tory institution.’’. 

Æ 


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